How to use sFLR for perps on SparkDEX
- Joel Monteiro
- Apr 9
- 3 min read
SparkDEX recently announced that sFLR, Sceptre’s liquid staking token on the Flare network, could be used as collateral for perps on their platform. This is obviously exciting news for Sceptre as we welcome a new use case for our token and in this blog post we are going to cover what perps are, what they are used for and how you can take part in them on SparkDEX using the sFLR you’ve received for staking on Sceptre.
The purpose of this post is to teach some fundamentals and not give financial advice. You should always do your research first.
What are perps and what are they used for?
Perps, short for Perpetual futures, are a type of derivative contract that enables traders to speculate on the price movements of an asset, without owning the underlying asset. The term “perpetual” comes from the fact that these contracts do not have a set expiration date, enabling traders to hold positions perpetually. This feature differentiates them from traditional time-bound futures contracts, which require traders to settle positions.
Perps serve a series of different purposes with examples:
Speculation: perps are used to speculate on the price movements of cryptocurrencies. By going long (buy) or short (sell), they can profit from both rising and falling markets without holding the underlying asset. For example, a long position on a BTC perp profits from a Bitcoin price increase, while a short position profits from a decrease.
Arbitrage: Arbitrageurs utilize perpetual futures to profit from price discrepancies between spot and futures markets. This strategy requires swift execution and a deep understanding of both markets.
Leverage Trading: Perpetual futures enable leveraged trading, allowing traders to control larger positions with less capital. For instance, 10x leverage permits a $10,000 position with $1,000. While leveraging amplifies potential profits, it also significantly increases the risk of rapid losses and liquidation.
Hedging: Perpetual futures also serve as hedging tools, mitigating spot market risk. For instance, a Bitcoin holder anticipating a price drop can short a BTC perp. This short position's gains offset potential losses in their Bitcoin holdings, effectively managing risk.
As you’ve likely noted, perpetual futures carry inherent risks. Leverage can rapidly deplete capital during volatile markets. Traders must also monitor funding rates, which impact long-term profitability. Effective risk management, including stop-loss orders and regular market monitoring, is crucial. As we previously advised, it’s essential to research and be aware of risks.
Using sFLR as collateral for perps on SparkDEX
Perpetual futures, as you've learned, allow for price speculation without direct asset ownership. Crucially, these contracts require collateral, and that’s the role sFLR can now play on SparkDEX. By using sFLR as collateral, traders can now speculate on the price of 16 different cryptocurrencies.
The Perps tab on the SparkDEX app provides access to perps. To use your sFLR as collateral, simply select it from the Collateral input field. If you need sFLR, you can go to SparkDEX’s Swap tab and trade a token in your wallet for it or stake FLR or wFLR on Sceptre.
To learn about trading perpetual futures on SparkDEX, the video below provides a detailed explanation and covers a lot of concepts related to perps trading. Note that the video features a mock token, as it was filmed during a testing environment.
This post aimed to introduce you to perpetual futures. As previously noted, due diligence is critical before participating in any new trading venture.
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